Shares of semiconductor giant Broadcom (AVGO 3.28%) were up Friday, gaining 2.7% as of noon ET, but were up as much as 3.6% earlier in the day. The rise comes as the S&P 500 (^GSPC 1.22%) and Nasdaq Composite (^IXIC 1.68%) were up 1% and 1.5%, respectively.
New year, new target
Broadcom received a price target boost Friday from an analyst at Barclays. In a research report on Friday, analyst Thomas O’Malley adjusted his price target for Broadcom from $205 to $260. The new target represents a roughly 10% upside from its current levels. Barclays maintains a buy rating for Broadcom stock.
Other firms agree. The investment bank Oppenheimer recently rated Broadcom as one of the top semiconductor stocks for 2025. Broadcom was joined by other heavy hitters like Nvidia and Marvell Technology.
A key partner delivers
The upgrade comes the day after Taiwan Semiconductor (TSMC), Broadcom’s fabrication partner, reported stronger-than-expected earnings.
TSMC delivered $26.4 billion in revenue for Q4 when $25.8 was expected. While this 38.8% year-over-year (YOY) jump is impressive, TSMC was able to grow net income by an incredible 57% YOY.
The earnings show that AI-driven demand for chipmaking is as strong as ever — good news for other semiconductor stocks up and down the value chain, Broadcom included. However, next year will not be without challenges for the company. Its current price-to-earnings ratio (P/E) of 183 is extremely high. It will have to execute nearly flawlessly if its stock is to continue its climb.
Johnny Rice has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia and Taiwan Semiconductor Manufacturing. The Motley Fool recommends Barclays Plc, Broadcom, and Marvell Technology. The Motley Fool has a disclosure policy.
